Vonovia raises earnings guidance on takeovers' FFO boost

German residential landlord Vonovia has raised its earnings guidance for this year after reporting a strong performance in the first nine months of 2015.

In a statement to announce its third quarter results, Vonovia said it now expects funds from operations to amount to €590-600 mln this year, up from a previous forecast of €560-580 mln.

Vonovia, which changed its name from Deutsche Annington earlier this year, said funds from operations more than doubled to €432 mln in the first nine months versus €205 mln in the same period a year earlier. Growth was underpinned by the integration of Gagfah - which proceeds ahead of schedule - as well as by the recent takeovers of Franconia and Suedewo Group.

Speaking at a conference call, Chief Executive Rolf Buch said Vonovia will embark on a roadshow in the coming days to discuss its increased earnings guidance as well as the planned Deutsche Wohnen bid ahead of a November 30 shareholder meeting, at which investors will vote on the hostile takeover. Vonovia must win the support of 75% of shareholders for the Deutsche Wohnen bid.

The company said last month that it planned to bid for its biggest competitor in a cash-and-share deal valued at €14 bn, including debt. The offer for Deutsche Wohnen is its 'best and final offer', CEO Buch said.

'We are convinced the offer we’re making is very attractive for all participants, including Deutsche Wohnen shareholders and Vonovia shareholders,' he commented.

He added Vonovia did not want to become a minority shareholder in Deutsche Wohnen should it fail to win more than 50% of the stock.

Buch: 'If we don't get 50%-plus one share then there is no offer.' He continued: 'If the deal doesn’t take place, we’ll continue our strategy as before.'

Deutsche Wohnen has not welcomed the bid, with its CEO calling the approach value-destroying.

Vonovia also announced on Tuesday that it has sold about 20,000 residential units to LEG Immobilien and added that it plans to use the proceeds to cut group debt to 46% of its assets.

Vonovia's portfolio is valued at €23.1 bn at the end of September, compared with €12.8 bn a year earlier.
Acquiring Deutsche Wohnen would increase Vonovia’s apartments to 514,000 from 370,000 and make it Europe’s second-largest property company after Unibail-Rodamco by market value.